1985 (9) TMI 111

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....n 8-11-1978 from Popatlal. The assessee himself had given a sum of Rs. 5,000 to the wife of Popatlal on 12-11-1977 and a sum of Rs. 5,000 to the wife of Kantilal on 1-11-1978. The case of the revenue was that these gifts indicated that the assessee's wife had received from Popatlal on 8-11-1978 an amount equivalent to that received by Popatlal's wife from the assessee on 12-11-1977. Similarly, the assessee's wife had received from Kantilal on 13-11-1977 an equivalent amount given to Kantilal's wife by the assessee on 1-11-1978. The argument was that these gifts showed a pattern of cross-gifts which amounted to a transfer by the assessee indirectly to his wife a sum of Rs. 5,000 which was invested in the firm Sri Seetha Laxmi Saree Centre an....

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....nue relied upon the decision in the case of CIT v. C.M. Kothari [1963] 49 ITR 107 (SC) to point out that there need not be a transfer of the same or equivalent amount for cross-gifts to amount to indirect transfer. But then, in that case, the cross-gifts have been made within a short span of time with the avowed object of defeating the provisions of section 16 of the Indian Income-tax Act, 1922. In the present case, on the contrary, the brothers have taken care not to make the gifts simultaneously which indicates their intention to see that the transaction of gifts were not inter-connected and did not form part of the same transaction so as to amount to indirect transfer to their respective spouses. Except the fact that the gifts are made b....

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.... in the matter of evasion of taxes, made a law to prevent the said fraud, it is difficult for this Court in the absence of any counterbalancing circumstances to hold, on the analogy drawn from American decisions, that the need for such a law is not in existence...." This observation was made on the context of the challenge to the provisions of section 16 and the reliance of the assessee in that case on the American decision in the case of Albert A. Hoeper v. Tax Commission of Wisconsin [1931] 76 L.Ed. 248. The American Supreme Court had held : "We have no doubt that because of the fundamental conceptions which underlie our system, any attempt by a state to measure the tax on one person's property or income by reference to the property....